Question

On November 1, Arvelo Corporation had $32,000 of raw materials on hand. During the month, the company purchased an additional $78,000 of raw materials. During November, $95,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $3,000. Prepare journal entries to record these events. Use those journal entries to answer the following questions:
The credits to the Work in Process account as a consequence of the raw materials transactions in November total:
(A) $78,000
(B) $0
(C) $95,000
(D) $92,000

Answer 1

Answer:

Option (c) is correct.

Explanation:

Given that,

Raw materials on hand = $32,000

Purchased an additional raw materials = $78,000

During November,

Raw materials were requisitioned = $95,000

Totaled  indirect materials = $3,000

The journal entry is as follows:

Work in process inventory (95,000 - 3,000) A/c      Dr. $92,000

Manufacturing overhead A/c                                      Dr. $3,000

To Raw material A/c                                                                        $95,000

The work in process is debited by $92,000 and raw material is credit by $95,000.